Tools & Resources

Mortgage Refinancing for a Community Center

This case example appeared originally in Essentials of Impact Investing: A Guide for Small-Staffed Foundations.
Investor: The Roosa Fund of Block Island Ecumenical Ministries, Inc.
Investee: Block Island Economic Development Foundation, Inc.
Asset Class: Private Debt
Investment Amount: $342,000
Impact Sector(s): Education; Housing; Human & Social Services
Date of Investment: 2013
Projected Exit: Ongoing
Financial Return Goal: Below Market Rate
The Roosa Fund of Block Island Ecumenical Ministries Inc. is a donor-advised fund that was established in 2011 with a gift from the Vernon D. and Florence E. Roosa Family Foundation Trust. It is a moderately sized fund with $3.8 million in investments at the end of 2013. Its mission is to respond to the needs of Block Island, Rhode Island, by providing assistance to vulnerable people—including the poor, the young, and the elderly—and by improving Block Island’s vulnerable natural environment. The fund’s giving emphasizes affordable housing, other basic human needs, local environmental improvement, and education. It also has limited programs helping the poorest of the poor in Haiti and Sendai, Japan.
The fund has ties to the Block Island Economic Development Foundation Inc. (BIED), a nonprofit that has provided the largest percentage of affordable housing on Block Island. BIED opened a much-needed community center, senior learning program, and preschool called the Early Learning Center Inc. BIED negotiated a $350,000 mortgage at 7.5 percent interest from Washington Trust for a building to house the organization.
The mortgage was more costly than it expected, but BIED chose not to raise the center’s rent and, as a result, was losing money. The Roosa Fund took over the mortgage from BIED and lowered the interest rate from 7.5 percent to 2 percent over 25 years, easing BIED’s financial strain and allowing the center’s rent to remain low.
Process: The fund does not have any full-time staff members and works to keep administrative costs low—currently these costs are about 4 percent of its operating budget. The fund receives legal services from a consultant tax attorney and works with an advisor at Washington Trust to vet and choose investments. It opted to work with Washington Trust for its small size, customer-service orientation, and low fees, in addition to its conservative investing philosophy.
Projected Impact: The Early Learning Center Inc. had been struggling financially: its day-care program does not receive funding from the town or state, and it receives only limited funding for its preschool. By refinancing the mortgage, BIED did not have to increase the center’s monthly rental payments, allowing the island’s only early learning enterprise to continue operating.

Have a question, website feedback, or idea to make our services better?



Please contact [email protected] if you have trouble logging in.